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How to Make Your Benefits Last While Changing Jobs

May 27, 2020 4 min read Ben Gran

Key takeaways

  • Understand your total benefits package and make a plan to continue coverage.
  • COBRA lets you keep health coverage after a job change but at 102% of the premium.
  • Contact your 401(k) plan provider to discuss options for your retirement assets.


The prospect of losing your benefits can be one of the most stressful parts of leaving your job, but it doesn't have to be. Whether you're leaving your job by choice to pursue freelancing or to retire — or are affected by a layoff or restructuring — you have options.

Even if you have a gap in employment, with some careful planning, you can avoid having a gap in health insurance or other insurance coverage.


Perform an overview of benefits

The first task is to conduct a thorough review of your employer benefits. Request a detailed description of your benefits package from human resources or review a recent pay stub to see how your income is allocated to various benefits. Go through the list and decide which ones need to be converted, continued, or replaced.



For example, benefits that will require action might include:

  • Health insurance — One of the most valued employee benefits, group health insurance is often more affordable and offers better coverage than what you could find on the individual market. Whether (and how) to continue your employer health insurance is one of the biggest decisions you'll face when changing jobs.

  • Life insurance — Many companies offer group life insurance to their employees, either as an automatic enrollment or as an optional policy that you can choose to sign up for if you qualify. Depending on the plan, you might be able to continue or convert your group life insurance policy.

  • Disability insurance — Employers have a vested interest in keeping you healthy, and many offer short-term or long-term disability insurance coverage that replaces your income in case you are disabled by an illness or accident. (This is different from worker's compensation insurance, which is a separate system that covers medical and wage benefits for workers who get injured or become ill while on the job.) When you change jobs, as long as you don't have a gap in income, you might be able to keep your disability insurance. Contact your disability insurance provider to discuss your options.

  • Retirement savings — Many employers will match a certain percentage of your income that you contribute to your 401(k) or other qualified retirement savings plan. You have some options on what to do with the money in a 401(k) account, but in the meantime, you'll want to research your new retirement savings options, either through your new employer or elsewhere.

  • Paid vacation and sick leave — If you have unused paid vacation or sick leave days when you change jobs (whether you are affected by a layoff or resign voluntarily), your employer should pay you for these days. Just like the employer match, this is a benefit that doesn't appear in your salary figure, but it has real cash value. Review your paid leave policy and ensure you get compensated for every unused day of paid time off that is owed to you.


Update your coverages

The priority for most people is health insurance. Ideally, you should not go for a single day without health insurance.

Here, you have a few options. You can typically continue your employer group health insurance by electing COBRA coverage. However with COBRA, you will be responsible for paying up to 102% of the premium costs, which might be a lot more money than you're used to paying for health insurance coverage.

When you leave your job for any reason and lose your health insurance, you can go to HealthCare.gov Opens in a new window and immediately apply for other health insurance options. Depending on your income and family size, you might qualify for Medicaid, CHIP (Children's Health Insurance Program) coverage for your kids, or a subsidized ACA (Affordable Care Act) health insurance plan.

As for life insurance and disability insurance, these are also worth continuing if you can, because the insurance you got from your employer might be better than what you could find on your own. Talk to your employer or your insurance company to see what options exist for you to continue paying your premiums or to convert your life and disability policies to an individual policy that is separate from your employer group coverage.

Continuing your life and disability coverage gives you portability – you can often preserve your insurability without having to go through a new medical exam or additional underwriting. It's more convenient and can often save you money because the insurance company will typically treat you like a current policyholder.


What you can do next

Understand the full financial picture of your employer benefits, and be prepared to replace, continue, or convert your coverages as needed. Talk to your employer or your insurance company for details. Go to HealthCare.gov Opens in new window to see your options for health insurance coverage. Depending on your age, income, and family size, you might qualify for Medicare, Medicaid, CHIP (Children's Health Insurance Program) coverage for your kids, or a subsidized ACA (Affordable Care Act) health insurance plan.


Ben Gran is a freelance writer based in Des Moines, Iowa. He writes about personal finance, public policy, financial services, technology, and business.


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